Can I claim R&D Tax Credits?

In short, Limited Companies incurring costs on innovative activities. This can range from start-ups who might need the relief for funding working capital or large businesses that will achieve a cash repayment because of reducing taxable profits. It's not just rocket science! 

In order to qualify for R&D tax credits your company must be seeking to advance science or technology within your industry. However, this does not mean you have to be a science or tech-based organisation.

It is an incentive to encourage research and development investment. Your company could be eligible, regardless of industry, if it is undertaking a qualifying activity such as:

• creating a new product,
• a new process
• a new service
• changing an existing product or service.

A company is eligible if they are taking a material risk when attempting to innovate/improve/develop a process, product or service.

A test to determine eligibility is to consider whether the competent individuals involved faced uncertain outcomes when the project in question began, meaning they did not know from the beginning whether a particular outcome was technologically achievable.

If the company can show their project goes further than just applying existing science or tech, then they may be eligible to claim.

Asking yourself the following questions will help identify if your business is eligible to claim:

• What is the biggest innovation disrupter that your industry faces?
   
• How do you plan to cope with this / turn it into an opportunity?
   
• What changes have you made in the last couple of years to help you differentiate yourselves from competitors?
   
• Have you adapted or streamlined any processes or systems in the business?
   
• Have you, or are you bringing any new products to the market?
   
• What new innovations have you introduced to the business recently?
   
• Have you had to come up with a unique or previously untested approach to solve a challenge the business is facing/has faced?

There are still a number of concerns and myths we hear about R&D tax relief that put some companies off exploring a claim. Here are a few of the most common misconceptions that we want to dispel and put minds at ease with our extensive experience of the relief.

• “We’re only improving existing technology so this doesn’t count.”
   
• “Only scientists in labs are able to claim this relief.”
   
• “Our customers sub-contract to us, therefore, we can’t claim.”
   
• “We haven’t paid any tax so we won’t see any benefit.”
   
• “We haven’t kept specific records so we can’t claim.”
   
• “We’ve previously been advised we can’t claim so there’s nothing we can do.”
   
• “We have received a grant so we are unable to claim.”